What impact will an increase in the capital stock have on GDP and the price level?

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If we consider the long run, when capital stock increases (and all other things remain equal), there will be an increase in the gross domestic product (GDP), and the price level will drop. The increase in GDP causes an increase in aggregate supply. When capital stock increases, the potential output increases, as firms can invest in technology and hence be able to better utilize their resources. This in turn allows them to be more productive and efficient. An example would be in the field of agriculture, where...

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